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October 31, 2012

Thiel Fellows Avoid Formal Education to Pursue Entrepreneurial Projects

FullEdenTh ielFellowSolarPanel2012-10-12.jpg

"Eden Full, 20, tested her rotating solar panel in Kenya in 2010." Source of caption and photo: online version of the NYT article quoted and cited below.

(p.1) EDEN FULL should be back at Princeton by now. She should be hustling to class, hitting the books, acing tests. In short, she should be climbing that old-school ladder toward a coveted spot among America's future elite.

She isn't doing any of that. Instead, Ms. Full, as bright and poised and ambitious as the next Ivy Leaguer, has done something extraordinary for a Princetonian: she has dropped out.

It wasn't the exorbitant cost of college. (Princeton, all told, runs nearly $55,000 a year.) She says she simply received a better offer -- and, perhaps, a shot at a better education.

Ms. Full, 20, is part of one of the most unusual experiments in higher education today. It rewards smart young people for not going to college and, instead, diving into the real world of science, technology and business.

The idea isn't nuts. After all, Bill Gates and Steve Jobs dropped out, and they did O.K.

Of course, their kind of success is rare, degree or no degree. Mr. Gates and Mr. Jobs changed the world. Ms. Full wants to, as well, and she's in a hurry. She has built a low-cost solar panel and is starting to test it in Africa.

"I was antsy to get out into the world and execute on my ideas," she says.

At a time when the value of a college degree is being called into question, and when job prospects for many new graduates are grimmer than they've been in years, perhaps it's no surprise to see a not-back-to-school movement spring up. What is surprising is where it's springing up, and who's behind it.

The push, which is luring a handful of select students away from the likes of Princeton, Harvard and M.I.T., is the brainchild of Peter A. Thiel, 44, a billionaire and freethinker with a remarkable record in Sil-(p. 7)icon Valley. Back in 1998, during the dot-com boom, Mr. Thiel gambled on a company that eventually became PayPal, the giant of online payments. More recently, he got in early on a little start-up called Facebook.

Since 2010, he has been bankrolling people under the age of 20 who want to find the next big thing -- provided that they don't look for it in a college classroom. His offer is this: $50,000 a year for two years, few questions asked. Just no college, unless a class is helpful for their Thiel projects.

. . .

Ms. Full is friends with another Thiel fellow, Laura Deming, 18. Ms. Deming is clearly brilliant. When she was 12, her family moved to San Francisco from New Zealand so she could work with Cynthia Kenyon, a molecular biologist who studies aging. When Ms. Deming was 14, the family moved again, this time to the Boston area, so she could study at M.I.T.

"Families of Olympic-caliber athletes make these kinds of sacrifices all the time," says Tabitha Deming, Laura's mother. "When we lived nearby in Boston, we were lucky to see her once a month. She never came home for weekends."

John Deming, Laura's father, graduated from Brandeis University at the age of 35 but says he disdains formal education at every level. His daughter was home-schooled.

"I can't think of a worse environment than school if you want your kids to learn how to make decisions, manage risk and take responsibility for their choices," Mr. Deming, an investor, wrote in an e-mail. "Rather than sending them to school, turn your kids loose on the world. Introduce them to the rigors of reality, the most important of which is earning your own way." He added, "I detest American so-called 'education.' "

His daughter's quest to slow aging was spurred by her maternal grandmother, Bertie Deming, 85, who began having neuromuscular problems a decade ago. Laura, a first-year fellow, now spends her days combing medical journals, seeking a handful of researchers worth venture capital funding, which is a continuation of her earlier work.

"I'm looking for therapies that target aging damage and slow or reverse it," she says. "I've already spent six years on this stuff. So far I've found only a few companies, two or three I'm really bullish on."

For the full story, see:

CAITLIN KELLY. "Drop Out, Dive In, Start Up.." The New York Times, SundayBusiness (Sun., September 16, 2012): 1 & 7.

(Note: ellipsis added.)

(Note: the online version of the article is dated September 15, 2012, and had he title "Forgoing College to Pursue Dreams.")

DemingLauraThielFellow2012-10-12.jpg "Laura Deming, left, at age 6 with her grandmother, whose neuromuscular problems have now inspired Laura to work on anti-aging technology." Source of caption and photo: online version of the NYT article quoted and cited above.

October 30, 2012

Preindustrial Icelanders Adapted to Adverse Global Cooling

(p. 254) We investigate the effect of climate on population levels in preindustrial Iceland. We find that short-term temperature changes affect the population growth rate. In particular, a 1ºC decrease in temperature causes about 0.57 percent decrease in the population growth rate for the two subsequent years, for a total effect of 1.14 percent. This effect appears to attenuate as the growth rate returns to trend in subsequent years. We also quantify the extent to which eighteenth- and nineteenth-century Icelanders adapt to long-run climate change. In particular, the data suggest that long-run adaptation to climate takes about 20 years and reduces the effect of cold shocks by about 60 percent. Our results also allow us to approximate the effect of permanent climate change on steady-state population levels. This approximation suggests that steady state population levels decrease by 10 percent to 26 percent for each 1ºC of sustained adverse temperature change.

(p. 255) . . .

If contemporary poor agricultural populations behave like their eighteenth- and nineteenth century Icelandic counterparts, then our results suggest that adverse climate change (which now refers to warming, not cooling) will have three effects. First, in the short run it will lead to a significant decrease in population growth rates. Second, over the course of a generation, adaptation will offset about 60 percent of the short run effects. Finally, in the long run, we expect a decrease in steady-state populations.

For the full article, from which the above conclusion is quoted, see:

Turner, Matthew A., Jeffrey S. Rosenthal, Jian Chen, and Chunyan Hao. "Adaptation to Climate Change in Preindustrial Iceland." American Economic Review 102, no. 3 (May 2012): 250-55.

(Note: underlining added; the underlined words appeared on p. 254 of the print issue, and on p. 255 of the online issue, of the article.)

October 29, 2012

China's State-Owned Enterprises Lose Money and Slow Growth


Source of book image: http://s.wsj.net/public/resources/images/OB-UU147_mcgreg_DV_20121001022644.jpg

In the passages quoted below "SOE" means "state-owned enterprise."

(p. B1) If the U.S. needs another wake-up call, it will get one this week with the publication of a bracing account of the danger that China's state capitalism poses to global business--and to China itself. James McGregor's new book, "No Ancient Wisdom, No Followers: The Challenges of Chinese Authoritarian Capitalism," dissects the complex policies and state structures that produced China's novel system. And it describes the limited recourse the U.S. and other nations have. (Full disclosure: Mr. McGregor is a friend and former colleague at the Journal.)

"The Communist Party of China has two unwavering objectives: Make China rich and powerful and guarantee the Party's political monopoly," Mr. McGregor writes. "At the center of this are behemoth state-owned enterprises that dominate all key sectors and have been instrumental to the country's current success.

"As China's global reach expands, this one-of-a-kind system is challenging the rules and organizations that govern global trade as well as the business plans and strategies of multinationals around the globe. At the same time, the limits of authoritarian capital-(p.B2)ism are increasingly evident at home, where corruption is endemic, the SOEs are consuming the fruits of reform, and the economic engine is running out of gas."

Born in the 1950s when 10,000 Soviet advisers helped China organize central planning, the state-owned enterprises quickly became bloated extensions of the Party's patronage and power.

. . .

The enterprises themselves, meanwhile, crowded out private competition. SOEs account for about 96% of China's telecom industry, 92% of power and 74% of autos. The combined profit of China Petroleum & Chemical and China Mobile in 2009 alone was greater than all the profit of China's 500 largest private firms, Mr. McGregor writes.

An independent Chinese study, he adds, says that if you subtract government subsidies from the biggest SOEs they actually lose money.

Mr. McGregor believes pressures are building within China for change--the result of SOEs that don't innovate enough, slowing growth, an angry private sector, and a pending leadership change, among other factors. Even some top leaders say reform is needed.

For the full commentary, see:

JOHN BUSSEY. "THE BUSINESS; Tackling the Many Dangers of China's State Capitalism." The New York Times (Fri., September 28, 2012): B1 & B2.

(Note: ellipsis added.)

(Note: the online version of the article has the date September 27, 2012.)

Book under discussion:

McGregor, James. No Ancient Wisdom, No Followers: The Challenges of Chinese Authoritarian Capitalism. Westport, CT: Prospecta Press, 2012.

October 28, 2012

The Kairos of Creative Destruction in Medicine

Wikipedia tells us that "Kairos" "is an ancient Greek word meaning the right or opportune moment (the supreme moment)."

(p. x) With a medical profession that is particularly incapable of making a transition to practicing individualized medicine, despite a new array of powerful tools, isn't it time for consumers to drive this capability? The median of human beings is not the message. The revolution in technology that is based on the primacy of individuals mandates a revolution by consumers in order for new medicine to take hold.

Now you've probably thought "creative destruction" is a pretty harsh term to apply to medicine. But we desperately need medicine to he Schumpetered, to be radically transformed. We need the digital world to invade (p. xi) the medical cocoon and to exploit the newfound and exciting technological capabilities of digitizing human beings. Some will consider this to be a unique, opportune moment in medicine, a veritable once-in-a-lifetime Kairos.

This book is intended to arm consumers to move us forward.


Topol, Eric. The Creative Destruction of Medicine: How the Digital Revolution Will Create Better Health Care. New York: Basic Books, 2012.

(Note: italics in original.)

October 27, 2012

Instead of Fixing "Inadequate Schools," Adderall Is Prescribed to "Struggling" Students

RocafortAmandaAndSonQuintn2012-10-12.jpg "Amanda Rocafort and her son Quintn in Woodstock, Ga. Quintn takes the medication Risperdal." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A1) CANTON, Ga. -- When Dr. Michael Anderson hears about his low-income patients struggling in elementary school, he usually gives them a taste of some powerful medicine: Adderall.

The pills boost focus and impulse control in children with attention deficit hyperactivity disorder. Although A.D.H.D is the diagnosis Dr. Anderson makes, he calls the disorder "made up" and "an excuse" to prescribe the pills to treat what he considers the children's true ill -- poor academic performance in inadequate schools.

For the full story, see:

ALAN SCHWARZ. "Attention Disorder or Not, Pills to Help in School." The New York Times (Tues., October 9, 2012): A1 & A18.

October 26, 2012

Government Disaster Relief Crowds Out Private Self-Protection

(p. 242) This paper has investigated the role of natural disaster shocks in determining gross migration flows, controlling for other place-based features. Using two micro datasets, we documented that in the 1920s and 1930s population was repelled from tornado-prone areas, with a larger effect on potential in-migrants than on existing residents, while flood events were associated with net inmigration. The differential migration responses by disaster type raises the question of whether public efforts at disaster mitigation counteract individual migration decisions. The nascent investment in rebuilding and protecting flood-prone areas could provide one example of public investment crowding out private self-protection (i.e., migration).

(p. 243) In future work, we plan to explore the role of New Deal disaster management more directly by exploiting variation across SEAs in federal expenditures and representation on key congressional committees. We predict that residents of areas that received federal largesse after a disaster in the 1930s will be less likely to move out and that new arrivals may be more likely to move in, while residents of areas that benefited less from New Deal spending will continue to use migration as a means of self-protection.

For the full article, from which the above conclusion is quoted, see:

Boustan, Leah Platt, Matthew E. Kahn, and Paul W. Rhode. "Moving to Higher Ground: Migration Response to Natural Disasters in the Early Twentieth Century." American Economic Review 102, no. 3 (May 2012): 238-44.

October 25, 2012

Reality Is Not Always "Elegant"


Source of book image: http://images.betterworldbooks.com/067/Ordinary-Geniuses-Segre-Gino-9780670022762.jpg

(p. C9) In the summer of 1953, while visiting Berkeley, Gamow was shown a copy of the article in Nature where Watson and Crick spelled out some of the genetic implications of their discovery that DNA is structured as a double helix. He immediately realized what was missing. Each helix is a linear sequence of four molecules known as bases. The sequence contains all the information that guides the manufacture of the proteins from which living things are made. Proteins are assembled from 20 different amino acids. What is the code that takes you from the string of bases to the amino acids? Gamow seems to have been the first to look at the problem in quite this way.

But he made a physicist's mistake: He thought that the code would be "elegant"--that each amino acid would be specified by only one string of bases. (These strings were dubbed "codons.") He produced a wonderfully clever code in which each codon consisted of three bases. That was the only part that was right. In the actual code sometimes three different codons correspond to the same amino acid, while some codons do not code for an amino acid at all. These irregularities are the results of evolutionary stops and starts, and no amount of cleverness could predict them.

For the full review, see:

JEREMY BERNSTEIN. "The Inelegant Universe." The Wall Street Journal (Sat., August 13, 2011): C9.

The book under review is:

Segrè, Gino. Ordinary Geniuses: Max Delbruck, George Gamow, and the Origins of Genomics and Big Bang Cosmology. New York: Viking, 2011.

October 24, 2012

"Our World Has Been "Schumpetered""

"Schumpeter" is now a verb!

(p. v) In the mid-twentieth century Joseph Schumpeter, the noted Austrian economist, popularized the term "creative destruction" to denote transformation that accompanies radical innovation. In recent years, our world has been "Schumpetered." By virtue of the intensive infiltration of digital devices into our daily lives, we have radically altered how we communicate with one another and with our entire social network at once. We can rapidly turn to our prosthetic brain, the search engine, at any moment to find information or compensate for a senior moment. Everywhere we go we take pictures and videos with our cell phone, the one precious object that never leaves our side. Can we even remember the old days of getting film developed? No longer is there such a thing as a record album that we buy as a whole--instead we just pick the song or songs we want and download them anytime and anywhere. Forget about going to a video store to rent a movie and finding out it is not in stock. Just download it at home and watch it on television, a computer monitor, a tablet, or even your phone. If we're not interested in getting a newspaper delivered and accumulating enormous loads of paper to recycle, or having our hands smudged by newsprint, we can simply click to pick the stories that interest us. Even clicking is starting to get old, since we can just tap a tablet or cell phone in virtual silence. The Web lets us sample nearly all books in print without even making a purchase and efficiently download the whole book in a flash. We have both a digital, virtual identity and a real one. This profile just scratches the surface of the way our lives have been radically transformed through digital innovation. Radically transformed. Creatively destroyed.


Topol, Eric. The Creative Destruction of Medicine: How the Digital Revolution Will Create Better Health Care. New York: Basic Books, 2012.

October 23, 2012

Abigail Fisher "Devastated" by "Holistic Review"

FisherAbigailAffirmativeAction2012-10-12.jpg "Abigail Fisher, 22, at the Supreme Court last month. "I probably would have gotten a better job offer had I gone to U.T.," Ms. Fisher said." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A1) WASHINGTON -- Abigail Fisher is a slight young woman with strawberry blond hair, a smile that needs little prompting, a determined manner and a good academic record. She played soccer in high school, and she is an accomplished cellist.

But the university she had her heart set on, the one her father and sister had attended, rejected her. "I was devastated," she said, in her first news interview since she was turned down by the University of Texas at Austin four years ago.

Ms. Fisher, 22, who is white and recently graduated from Louisiana State University, says that her race was held against her, and the Supreme Court is to hear her case on Wednesday, bringing new attention to the combustible issue of the constitutionality of racial preferences in admissions decisions by public universities.

"I'm hoping," she said, "that they'll completely take race out of the issue in terms of admissions and that everyone will be able to get into any school that they want no matter what race they are but solely based on their merit and if they work hard for it."

. . .

(p. A17) The majority opinion in the Grutter case, written by Justice Sandra Day O'Connor, rejected the use of racial quotas in admissions decisions but said that race could be used as one factor among many, as part of a "holistic review." Justice O'Connor retired in 2006, and her replacement by Justice Samuel A. Alito Jr. may open the way for a ruling cutting back on such race-conscious admissions policies, or eliminating them.

. . .

She said she was trying to come to terms with her role in a case that could reshape American higher education. Asked if she found it interesting or exciting or scary, she said, "All of the above."

But she did not hesitate to say how she would run an admission system. "I don't think," she said, "that we even need to have a race box on the application."

For the full story, see:

ADAM LIPTAK. "Race and College Admissions, Facing a New Test by Justices." The New York Times (Tues., October 9, 2012): A1 & A17.

(Note: ellipses added.)

(Note: the online version of the review has the date October 8, 2012.)

October 22, 2012

Paul Samuelson, in 2009 Interview, Says Economists Should Study Economic History

Clarke Conor interviewed Paul Samuelson in the summer of 2009. Since Samuelson died in October 2009, the interview was one of his last.

Samuelson was a student of Joseph Schumpeter at Harvard, and Schumpeter worked to get Samuelson financial support and a job. Near the end of his life, Schumpeter was ridiculed when he warned National Bureau of Economic Research (NBER) economists that they should not neglect economic history.

It took Paul Samuelson a long time to appreciate Schumpeter's truth.

Very last thing. What would you say to someone starting graduate study in economics? Where do you think the big developments in modern macro are going to be, or in the micro foundations of modern macro? Where does it go from here and how does the current crisis change it?

Well, I'd say, and this is probably a change from what I would have said when I was younger: Have a very healthy respect for the study of economic history, because that's the raw material out of which any of your conjectures or testings will come. And I think the recent period has illustrated that. The governor of the Bank of England seems to have forgotten or not known that there was no bank insurance in England, so when Northern Rock got a run, he was surprised. Well, he shouldn't have been.

But history doesn't tell its own story. You've got to bring to it all the statistical testings that are possible. And we have a lot more information now than we used to.

For the full interview, see:

Clarke, Conor. "An Interview with Paul Samuelson, Part Two." The Atlantic (2009), http://www.theatlantic.com/politics/archive/2009/06/an-interview-with-paul-samuelson-part-two/19627/.

(Note: bold indicates Conor question, and is bolded in original.)

(Note: the interview was posted on The Atlantic online website, but I do not believe that it ever appeared in the print version of the magazine.)

October 21, 2012

Chamber Blitz Clip for Tort Reform

BlitzGasolineCans2012-10-11.jpg "Blitz gasoline cans, at Ace Hardware in Miami, Okla., will soon disappear from stores. The company closed because of the costs of lawsuits contending that the cans were unsafe." Source of caption and photo: online version of the NYT article quoted and cited below.

The "Mr. Flick" quoted below is Rocky Flick, the former CEO of Blitz.

(p. B1) Crusading against what it considers frivolous lawsuits, the United States Chamber of Commerce has had no shortage of cases to highlight, like the man suing a cruise line after burning his feet on a sunny deck or the mother claiming hearing loss from the screaming at a Justin Bieber concert.

Now, the lobbying group's Institute for Legal Reform is showing a 30-second commercial that uses Blitz USA, a bankrupt Oklahoma gasoline can manufacturer, to illustrate the consequences of abusive lawsuits. The ad shows tearful workers losing their jobs and the lights going out at the 46-year-old company as a result of steep legal costs from lawsuits targeting the red plastic containers, according to the company and the institute.

The closing of the 117-employee operation this summer became a rallying point for proponents of tort reform. . . .

. . .

(p. B2) Blitz executives note that the company, which was the nation's leading gas can producer, sold more than 14 million cans a year over the last decade, with fewer than two reported incidents per million cans sold. The company said the most serious incidents usually involved obvious misuse of the cans, like pouring gasoline on an open fire.

. . .

A decade ago, Mr. Flick said, the company would face one or two lawsuits a year. The number grew to six or seven a year, and finally to 25 or so last year when Blitz filed for bankruptcy.

For the full story, see:

CLIFFORD KRAUSS. "Two Sides of Product Liability: A Factory's Closing Focuses Attention on Tort Reform." The New York Times (Fri., October 4, 2012): B1.

(Note: ellipses added.)

(Note: the online version of the article is dated October 5, 2012 and has the shorter title "A Factory's Closing Focuses Attention on Tort Reform.")

View the Chamber video clip on the Blitz example:


"Rocky Flick, Blitz's former chief executive." Source of caption and photo: online version of the NYT article quoted and cited above.

October 20, 2012

Much Innovation Has "Nothing to Do with Science--It's Just Creative Mankind Chipping Away at Things"

(p. 122) VANE and MULHEARN: The prize rewards specific discoveries, achievements, or breakthroughs in economic science. Your pioneering contributions have opened up a rich seam of research for others to mine. Does academic knowledge largely progress through the lead taken by a small number of creative innovators?
PHELPS: That's such a good question. It resonates with a subject in the area of innovation theory. The old guys like Arthur Spiethoff thought that progress was due to the great discoveries of the scientists and navigators. Schumpeter (1934) (p. 123) didn't depart altogether from that, he simply said, well, that's right but you've got to have some entrepreneur to actually implement it. But don't think there's much creativity there--everybody knows what's in the air. And it's very rare that anything new really gets created in the course of this development work. But now we don't think about innovation in that way so much. We recognize that once in a while there is a big leap which creates the ground for a surge of innovations to follow. Nowadays we realize that an awful lot of innovation just comes from business people operating at the grass roots having ideas on the basis of what they see around them. Nothing to do with science--it's just creative mankind chipping away at things. I know that the Sens and the Mundells and the Lucases are towering figures, but they couldn't have become so if they hadn't read a lot of papers by, well, pretty average people who are just doing a good job of exploring a question and giving inspiration. I guess the towering figures are people with just a little more drive, a little more imagination, just a little cleverer in putting some things together. In other words, I don't know the answer to the question [laughter].

For the full interview, from which the above is quoted, see:

Vane, Howard R., and Chris Mulhearn, interviewers. "Interview with Edmund S. Phelps." Journal of Economic Perspectives 23, no. 3 (Summer 2009): 109-24.

October 19, 2012

Openness to Creative Destruction Will Speed Health Care Progress


Source of book image: http://si.wsj.net/public/resources/images/OB-RQ412_bkrvme_DV_20120202132402.jpg

Eric Topol has bucked the medical establishment before. In entries on August 20, 2006 and on December 26, 2006 on this blog, he was quoted as arguing that stents were being overused. Now he argues that the medical establishment is slowing progress that could reduce disability and extend life. He advocates the sequencing of each of our genomes and a medical revolution that will fine-tune treatment to our genomic differences.

Many agree with Topol's view of the future of medicine, but many medical schools are neglecting teaching future doctors about the therapeutic implications of individual genomics.

Topol calls for the creative destruction of medical education and other medical institutions.

The early part of the book is weak because it discusses subjects on which Topol is not an expert---such as the history and applications of information technology. In these sections, he too often tediously explains the obvious and widely known. Sometimes in this section of the book, he is just wrong, as when (p. 14) he claims that Werner Sombart originated "creative destruction."

After the early chapters the book comes into its own when Topol discusses medical advances and challenges. While his early prose may be aimed too low, his later prose may be aimed too high---but it is better to be talked up to than down to, and the best of the later chapters contain some fascinating descriptions of what is happening on the frontiers of medicine, and what could be happening if we change policies and institutions to make medicine more open to creative destruction.

In the following few weeks, I will be quoting several of the more important or thought-provoking passages.

Book discussed:

Topol, Eric. The Creative Destruction of Medicine: How the Digital Revolution Will Create Better Health Care. New York: Basic Books, 2012.

October 18, 2012

Capitalism Is Justified Because It Is an "Engine for Generating Creative Workplaces"

(p. 121) Phelps: . . . Since 2002, I've been trying to develop a new justification for capitalism, at least I think it's new, in which I say that if we're going to have any possibility of intellectual development we're going to have to have jobs offering stimulating and challenging opportunities for problem solving, discovery, exploration, and so on. And capitalism, like it or not, has so far been an extraordinary engine for generating creative workplaces in which that sort of personal growth and personal development is possible; perhaps not for everybody but for an appreciable number of people, so if you think that it's a human right to have that kind of a life, then you have on the face of it a justification for capitalism. There has to be something pretty powerful to overturn or override that.

For the full interview, from which the above is quoted, see:

Vane, Howard R., and Chris Mulhearn, interviewers. "Interview with Edmund S. Phelps." Journal of Economic Perspectives 23, no. 3 (Summer 2009): 109-24.

(Note: ellipsis added.)

October 17, 2012

The Entrepreneurial Resilience of a Business School Dean


"Mark Zupan is the dean of the Simon School of Business at the University of Rochester. Baggage carts once were his salvation." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. B4) Once I landed in Boston without my wallet or any money, I was able to put into practice what I learned from watching the wonderful movie "The Terminal" featuring Tom Hanks.

Like the character he portrayed, Viktor Navorski, I wandered through the airport and rounded up and returned six baggage carts. I was refunded enough change to be able to afford the subway fare to get to my first meeting. Then, I was able to borrow enough cash from the amused alum I was meeting with to get through the rest of the day and back home to Rochester that night after my assistant faxed a copy of my driver's license and passport to me.

I have to admit I felt a little idiotic rounding up the carts, but it was one of my finest entrepreneurial ventures.

For the full story, see:

MARK ZUPAN. "FREQUENT FLIER; How to Cope at the Airport Without a Wallet." The New York Times (Tues., September 4, 2012): B4.

(Note: the online version of the article is dated September 3, 2012.)

October 16, 2012

No Amount of Econometric Sophistication Will Substitute for Good Data

(p. 234) Using a powerful method due to Singh, we have established a relationship between God's attitude toward man and the amount of prayer (p. 235) transmitted to God. The method presented here is applicable to a number of important problems. Provided conditional density (1) is assumed, we do not need to observe a variable to compute its conditional expectation with respect to another variable whose density can be estimated. For example, one can extend current empirical work in a variety of areas of economics to estimate the effect of income on happiness or the effect of income inequality on democracy. We conjecture that this powerful method can be extended to the more general case when X is not observed either.

For the full article, from which the above is quoted, see:

Heckman, James. "The Effect of Prayer on God's Attitude toward Mankind." Economic Inquiry 48, no. 1 (Jan. 2010): 234-35.

October 15, 2012

"The New Upper Class Must Start Preaching What It Practices"


Source of book image: http://si.wsj.net/public/resources/images/OB-RO889_bkrvmu_DV_20120130124608.jpg

(p. C2) There remains a core of civic virtue and involvement in working-class America that could make headway against its problems if the people who are trying to do the right things get the reinforcement they need--not in the form of government assistance, but in validation of the values and standards they continue to uphold. The best thing that the new upper class can do to provide that reinforcement is to drop its condescending "nonjudgmentalism." Married, educated people who work hard and conscientiously raise their kids shouldn't hesitate to voice their disapproval of those who defy these norms. When it comes to marriage and the work ethic, the new upper class must start preaching what it practices.

For the full essay, see:

CHARLES MURRAY. "The New American Divide; The ideal of an 'American way of life' is fading as the working class falls further away from institutions like marriage and religion and the upper class becomes more isolated. Charles Murray on what's cleaving America, and why." The Wall Street Journal (Sat., January 21, 2012): C1-C2.

The essay quoted above is related to Murray's book:

Murray, Charles. Coming Apart: The State of White America, 1960-2010. New York: Crown Forum, 2012.

October 14, 2012

Kahneman Says "Intuitive Thinking" Is "the Origin of Most of What We Do Right--Which Is Most of What We Do"

(p. 415) The investment of attention improves, performance in numerous activities--think of the risks of driving through a narrow space while your mind is wandering-and is essential to some tasks, including comparison, choice, and ordered reasoning. However, System 2 is not a paragon of rationality. Its abilities are limited and so is the knowledge to which it has access. We do not always think straight when we reason, and the errors are not always due to intrusive and incorrect intuitions. Often we make mistakes because we (our System 2) do not know any better.

I have spent more time describing System 1, and have devoted many (p. 416) pages to errors of intuitive judgment and choice that I attribute to it. However, the relative number of pages is a poor indicator of the balance between the marvels and the flaws of intuitive thinking. System 1 is indeed the origin of much that we do wrong, but it is also the origin of most of what we do right--which is most of what we do. Our thoughts and actions are routinely guided by System 1 and generally are on the mark. One of the marvels is the rich and detailed model of our world that is maintained in associative memory: it distinguishes surprising from normal events in a fraction of a second, immediately generates an idea of what was expected instead of a surprise, and automatically searches for some causal interpretation of surprises and of events as they take place.


Kahneman, Daniel. Thinking, Fast and Slow. New York: Farrar, Straus and Giroux, 2011.

October 13, 2012

Romney Praises Dan Senor Book on Israeli Entrepreneurship

SenorDanRomneyAdviserBriefing2012-09-03.jpg "Dan Senor, left, a leading campaign adviser, at a briefing on Saturday for the Romney campaign on the plane en route to Israel." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A10) WASHINGTON -- Moments after making remarks in Jerusalem about Middle East culture that enraged Palestinians and undermined the public relations value of his trip to Israel, Mitt Romney looked around the room for Dan Senor, one of his campaign's top foreign policy advisers.

It was Mr. Senor's book about entrepreneurs in Israel that informed his comments, Mr. Romney explained to the group of Jewish-American donors he had assembled at the King David hotel. The book, "Start-up Nation," is among Mr. Senor's writings that Mr. Romney frequently cites in public.

For the full story, see:

MICHAEL D. SHEAR. "Adviser Draws Attention to Romney Mideast Policy." The New York Times (Thurs., August 2, 2012): A10.

(Note: the online version of the article is dated August 1, 2012.)

The Senor book is:

Senor, Dan, and Saul Singer. Start-up Nation: The Story of Israel's Economic Miracle. hb ed. New York: Twelve, 2009.


"L. Paul Bremer III, left, in 2004 when he was the top United States envoy in Iraq, with Mr. Senor, who was his spokesman." Source of caption and photo: online version of the NYT article quoted and cited above.

October 12, 2012

School Competition Benefits Students

(p. 150) We study competition between two publicly funded school systems in Ontario, Canada: one that is open to all students, and one that is restricted to children of Catholic backgrounds. A simple model of competition between the competing systems predicts greater effort by school managers in areas with more Catholic families who are willing to switch systems. Consistent with this insight, we find significant effects of competitive pressure on test score gains between third and sixth grade. Our estimates imply that extending competition to all students would raise average test scores in sixth grade by 6 percent to 8 percent of a standard deviation.

For the full article, from which the above abstract is quoted, see:

Card, David, Martin D. Dooley, and A. Abigail Payne. "School Competition and Efficiency with Publicly Funded Catholic Schools." American Economic Journal: Applied Economics 2, no. 4 (Oct. 2010): 150-76.

October 11, 2012

Garfield's Doctors "Basically Tortured Him to Death"


Source of book image: http://rsirving.files.wordpress.com/2012/04/destinyrepublic.jpeg

(p. 15) Had Garfield been left where he lay, he might well have survived; the bullet failed to hit his spine or penetrate any vital organs. Instead, he was given over to the care of doctors, who basically tortured him to death over the next 11 weeks. Two of them repeatedly probed his wound with their unsterilized fingers and instruments before having him carted back to the White House on a hay-and-horsehair mattress.

There, control of the president was seized by a quack with the incredible name of Dr. Doctor Willard Bliss. Dr. Doctor Bliss insisted on stuffing Garfield with heavy meals and alcohol, which brought on protracted waves of vomiting. He and his assistants went on probing the wound several times a day, causing infections that burrowed enormous tunnels of pus throughout the president's body.

Garfield's medical "care" is one of the most fascinating, if appalling, parts of Millard's narrative. Joseph Lister had been demonstrating for years how his theories on the prevention of infection could save lives and limbs, but American doctors largely ignored his advice, not wanting to "go to all the trouble" of washing hands and instruments, Millard writes, enamored of the macho trappings of their profession, the pus and blood and what they referred to fondly as the "good old surgical stink" of the operating room.

Further undermining the president's recovery was his sickroom in the White House -- then a rotting, vermin-ridden structure with broken sewage pipes. Outside, Washington was a pestilential stink hole; besides the first lady, four White House servants and Guiteau himself had contracted malaria. Hoping to save Garfield from the same, Bliss fed him large doses of quinine, causing more intestinal cramping.

The people rallied around their president even as his doctors failed him. The great Western explorer and geologist John Wesley Powell helped design Ameri­ca's first air-conditioning system to relieve Garfield's agony. Alexander Graham Bell worked tirelessly to invent a device that could locate the bullet. (It failed when Dr. Bliss insisted he search only the wrong side of Garfield's torso.) Two thousand people worked overnight to lay 3,200 feet of railroad track, so the president might be taken to a cottage on the Jersey Shore. When the engine couldn't make the grade, hundreds of men stepped forward to push his train up the final hill.

The president endured everything with amazing fortitude and patience, even remarking near the end, when he learned a fund was being taken up for his family: "How kind and thoughtful! What a generous people!"

"General Garfield died from malpractice," Guiteau claimed, defending himself at his spectacle of a trial. This was true, but not enough to save Guiteau from the gallows.

For the full review, see:

KEVIN BAKER. "Death of a President." The New York Times Book Review (Sun., October 2, 2011): 14-15.

(Note: the online version of the review has the date September 30, 2011, and has the title "The Doctors Who Killed a President.")

The full reference for the book under review, is:

Millard, Candice. Destiny of the Republic: A Tale of Madness, Medicine and the Murder of a President. New York: Doubleday, 2011.

October 10, 2012

The Precautionary Principle Would Have Blocked Many Great Innovations

(p. 351) The intense aversion to trading increased risk for some other advantage plays out on a grand scale in the laws and regulations governing risk. This trend is especially strong in Europe where the precautionary principle, which prohibits any action that might cause harm, is a widely accepted doctrine. In the regulatory context, the precautionary principle imposes the entire burden of proving safety on anyone who undertakes actions that might harm people or the environment. Multiple international bodies have specified that the absence of scientific evidence of potential damage is not sufficient justification for taking risks. As the jurist Cass Sunstein points out, the precautionary principle is costly, and when interpreted strictly it can be paralyzing. He mentions an impressive list of innovations that would not have passed the test, including "airplanes, air conditioning, antibiotics, automobiles, chlorine, the measles vaccine, open-heart surgery, radio, refrigeration, smallpox vaccine, and X-rays." The strong version of the precautionary principle is obviously untenable. But enhanced loss aversion is embedded in a strong and widely shared moral intuition; it originates in System 1. The dilemma between intensely loss-averse moral attitudes and efficient risk management does not have a simple and compelling solution.


Kahneman, Daniel. Thinking, Fast and Slow. New York: Farrar, Straus and Giroux, 2011.

(Note: italics in original.)

October 9, 2012

"Extinct" Snail Found Alive

RocksnailAlabama2012-09-03.jpg "The oblong rocksnail in Alabama, 12 years after it was declared extinct." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. D3) A freshwater snail has been rediscovered on the Cahaba River in Alabama, 12 years after it was declared extinct.

Nathan Whelan, a graduate student in biology at the University of Alabama, spotted the snail -- called the oblong rocksnail, or Leptoxis compacta -- on a small stretch of the river.

For the full story, see:

SINDYA N. BHANOO. "OBSERVATORY; Snails Appear Reborn, or Were Overlooked." The New York Times (Tues., August 14, 2012): D3.

(Note: the online version of the article has the date August 13, 2012.)

Whelan and co-authors report their findings in:

Whelan NV, Johnson PD, Harris PM (2012) Rediscovery of Leptoxis compacta (Anthony, 1854) (Gastropoda: Cerithioidea: Pleuroceridae). PLoS ONE 7(8): e42499. doi:10.1371/journal.pone.0042499

October 8, 2012

Ban of Affirmative Action Does Not Reduce Overall Black Enrollment

(p. 435) Using institutional data on race-specific college enrollment and completion, I examine whether minority students were less likely to enroll in a four-year public college or receive a degree following a statewide affirmative action ban. As in previous studies, I find that black and Hispanic enrollment dropped at the top institutions; however, there is little evidence that overall black enrollment at public universities fell. Finally, despite evidence that fewer blacks and Hispanics graduated from college following a ban, the effects on graduation rates are very noisy.

For the full article, from which the above abstract is quoted, see:

Backes, Ben. "Do Affirmative Action Bans Lower Minority College Enrollment and Attainment?" Journal of Human Resources 47, no. 2 (Spring 2012): 435-55.

October 7, 2012

"Education Bubble": "A Spurious Inflation of the Credentials Required for Many Jobs"


Source of book image: http://2.bp.blogspot.com/-N1hV093ckVc/T8YmCXE2sQI/AAAAAAAAAYc/1B5hWDeXbzQ/s1600/basement.jpg

(p. 17) In June 2008, The Atlantic published an essay by an adjunct instructor of English, identified only as "Professor X," whose job filled him with despair. Although the courses he taught were introductory, success was beyond many of his students, who, he wrote, were "in some cases barely literate." X found giving F's to be excruciating -- "I am the man who has to lower the hammer," he lamented -- in part because he identified with his older students, who seemed to have lost their way in their careers much as X himself had.

. . .

. . . X's function, in the ecology of the colleges where he teaches, is gatekeeper -- most students who fail his classes will drop out -- and he articulates the ethical challenge before him this way: "What grade does one give a college student who progresses from a 6th- to a 10th-grade level of achievement?" X gives F's.

. . .

X and his wife got snookered in the housing bubble, and he wonders if the misery in his classroom might result from a similar education bubble. In 1940, there were 1.5 million college students in America; in 2006, there were 20.5 million. In X's opinion, a glut of degrees has led to a spurious inflation of the credentials required for many jobs. Tuitions are rising, and two-thirds of college graduates now leave school with debt, owing on average about $24,000. A four-year degree is said to increase wages about $450,000 over the course of a lifetime, but X doubts the real value of degrees further down on the hierarchy of prestige. To him, the human cost is more conspicuous.

. . .

Professor X can be caustic about the euphemism and somewhat willed optimism that sometimes befog discussion of how to teach unprepared students. To relieve his and his students' unhappiness, he proposes that employers stop demanding unnecessary degrees: a laudable suggestion, unlikely to be realized until the degree glut has dried up.

For the full review, see:

CALEB CRAIN. "Lost in the Meritocracy." The New York Times Book Review (Sun., May 1, 2011): 17.

(Note: ellipses added.)

(Note: the online version of the review has the date April 29, 2011.)

The full reference for the book under review, is:

X, Professor. In the Basement of the Ivory Tower: Confessions of an Accidental Academic. New York: Viking, 2011.

October 6, 2012

Sunk-Cost Fallacy "Can Be Overcome"

(p. 346) The sunk-cost fallacy keeps people for too long in poor jobs, unhappy marriages, and unpromising research projects. I have often observed young scientists struggling to salvage a doomed project when they would be better advised to drop it and start a new one. Fortunately, research suggests that at least in some contexts the fallacy can be overcome. The sunk-cost fallacy is identified and taught as a mistake in both economics and business courses, apparently to good effect: there is evidence that graduate students in these fields are more willing than others to walk away from a failing project.


Kahneman, Daniel. Thinking, Fast and Slow. New York: Farrar, Straus and Giroux, 2011.

October 5, 2012

Modern Humans Created Flutes Over 42,000 Years Ago

BoneFluteHohleFelsCaveGermany2012-09-03.jpg "LOST AND FOUND; Scientists say that this bone flute, found at Hohle Fels Cave in Germany, is at least 42,000 years old." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. D4) In hillside caves of southwestern Germany, archaeologists in recent years have uncovered the beginnings of music and art by early modern humans migrating into Europe from Africa. New dating evidence shows that these oldest known musical instruments in the world, flutes made of bird bone and mammoth ivory, are even older than first thought.

Scientists led by Thomas Higham of the University of Oxford in England reported last week that improved radiocarbon tests determined that animal bones found with the flutes were 42,000 to 43,000 years old. This is close to the time when the first anatomically modern humans were spreading into Central Europe, presumably along the Danube River valley.

Earlier tests had yielded dates of 35,000 years ago for artifacts at several caves where flutes and also ivory statuettes of voluptuous women have been found near Ulm, Germany, and the Danube's headwaters. The best preserved bone flute, with five finger holes, was collected at Hohle Fels Cave. The new analysis was based on material from the nearby Geissenklösterle Cave.

For the full story, see:

JOHN NOBLE WILFORD. "Flute's Revised Age Dates the Sound of Music Earlier." The New York Times (Tues., May 29, 2012): D4.

Some of the new results summarized above are reported to the scientific community in:

Higham, Thomas, Laura Basell, Roger Jacobi, Rachel Wooda, Christopher Bronk Ramseya, and Nicholas J. Conardf. "Τesting Models for the Beginnings of the Aurignacian and the Advent of Figurative Art and Music: The Radiocarbon Chronology of Geißenklösterle." Journal of Human Evolution 62, no. 6 (June 2012): 664-76.

October 4, 2012

Skilled Immigrants Increase U.S. Patents

(p. 31) We measure the extent to which skilled immigrants increase innovation in the United States. The 2003 National Survey of College Graduates shows that immigrants patent at double the native rate, due to their disproportionately holding science and engineering degrees. Using a 1940-2000 state panel, we show that a 1 percentage point increase in immigrant college graduates' population share increases patents per capita by 9-18 percent. Our instrument for the change in the skilled immigrant share is based on the 1940 distribution across states of immigrants from various source regions and the subsequent national increase in skilled immigration from these regions.

For the full article, from which the above abstract is quoted, see:

Hunt, Jennifer, and Marjolaine Gauthier-Loiselle. "How Much Does Immigration Boost Innovation?" American Economic Journal: Macroeconomics 2, no. 2 (April 2010): 31-56.

October 3, 2012

Big Science Done Privately at Great Risk


Source of book image: http://t0.gstatic.com/images?q=tbn:ANd9GcQPLdrVlC1FT3ojxyxWJLq55AeAs87pw_Bw6ks1ugFnkcI_DBa_1w&t=1

(p. 23) Next time you find yourself grousing when the passenger in front reclines his seat a smidge too far, consider the astronomers of the Enlightenment. In 1761 and 1769, dozens and dozens of stargazers traveled thousands of miserable miles to observe a rare and awesome celestial phenomenon. They went by sailing ship and open dinghy, by carriage, by sledge and on foot. They endured discomfort that in our own flabby century would generate years of litigation. And they did it all for science: the men in powdered wigs and knee britches were determined to measure the transit of Venus.

. . .

The British astronomer Edmond Halley had realized that precise measurement of a transit might give astronomers armed with a clock and a telescope the data they needed to calculate how far Earth is from the Sun. With that distance in hand, they could work out the actual size of the solar system, the great astronomical problem of the era. The catch was that it would take multiple measurements from carefully chosen locations all over the Northern and Southern Hemispheres. But that was somebody else's problem. Halley knew he wouldn't live to see the transit of 1761.

That challenge fell to the French astronomer Joseph-Nicolas Delisle, who managed to energize and rally his colleagues in the years leading up to the transit, then coordinate the enormous effort that would ultimately involve scientists and adventurers from France, Britain, Russia, Germany, the Netherlands, Italy, Sweden and the American colonies. When you think about how hard it is to arrange a simple dinner with a few friends who live in the same city and use the same language when e-mailing, it's enough to take your breath away.

. . .

Sea travel was so risky in 1761 that observers took separate ships to the same destination to increase the chances some of them would make it alive. The Seven Years' War was on, and getting caught in the cross-fire was a constant concern. One French scientist carried a passport arranged by the Royal Society in London advising the British military "not to molest his person or Effects upon any account." Others were shelled by the French or caught in border troubles with the Russians. An observer en route to Tobolsk, in Siberia, found himself floating in ice up to his waist when his carriage fell through the frozen river they were traveling in lieu of a road. He made it to his destination. Another, heading toward eastern Finland via the iced-over Gulf of Bothnia, was repeatedly catapulted out of his sledge as the runners caught on the crests of frozen waves. He made it too.

For the full review, see:

JoANN C. GUTIN. "Masters of the Universe." The New York Times Book Review (Sun., May 20, 2012): 19.

(Note: ellipses added.)

(Note: the online version of the review has the date May 18, 2012.)

The full reference for the book under review, is:

Wulf, Andrea. Chasing Venus: The Race to Measure the Heavens. New York: Alfred A. Knopf, 2012.

ApparatusTransitVenus2012-09-01.jpg Source of image: online version of the NYT article quoted and cited above.

October 2, 2012

Kahneman Preaches that People Can and Should Act More Rationally

(p. 338) . . . I have a sermon ready for Sam if he rejects the offer of a single highly favorable gamble played once, and for you if you share his unreason-able aversion to losses:

I sympathize with your aversion to losing any gamble, but it is costing you a lot of money. Please consider this question: Are you on your deathbed? Is this the last offer of a small favorable gamble that you will ever consider? Of course, you are unlikely to be offered exactly this gamble again, but you will have many opportunities to consider attractive gambles with stakes that are very small relative to your wealth. You will do yourself a large financial favor if you are able to see each of these gambles as part of a bundle of small gambles and rehearse the mantra that will get you significantly closer to economic rationality: you win a few, you lose a few. The main purpose of the mantra is to control your emotional response when you do lose. If you can trust it to be effective, you should remind yourself of it when deciding whether or not to accept a small risk with positive expected value. Remember these qualifications when using the mantra:
  • It works when the gambles are genuinely independent of each other; it does not apply to multiple investments in the same industry, which would all go bad together.

(p. 339)

  • It works only when the possible loss does not cause you to worry about your total wealth. If you would take the loss as significant bad news about your economic future, watch it!

  • It should not be applied to long shots, where the probability of winning is very small for each bet.

If you have the emotional discipline that this rule requires, you will never consider a small gamble in isolation or be loss averse for a small gamble until you are actually on your deathbed and not even then.

This advice is not impossible to follow. Experienced traders in financial markets live by it every day, shielding themselves from the pain of losses by broad framing. As was mentioned earlier, we now know that experimental subjects could be almost cured of their loss aversion (in a particular context) by inducing them to "think like a trader," just as experienced baseball card traders are not as susceptible to the endowment effect as novices are. Students made risky decisions (to accept or reject gambles in which they could lose) under different instructions. In the narrow-framing condition, they were told to "make each decision as if it were the only one" and to accept their emotions. The instructions for broad framing of a decision included the phrases "imagine yourself as a trader," "you do this all the time," and "treat it as one of many monetary decisions, which will sum together to produce a 'portfolio'." The experimenters assessed the subjects' emotional response to gains and losses by physiological measures, including changes in the electrical conductance of the skin that are used in lie detection. As expected, broad framing blunted the emotional reaction to losses and increased the willingness to take risks.


Kahneman, Daniel. Thinking, Fast and Slow. New York: Farrar, Straus and Giroux, 2011.

(Note: ellipsis added; italics in original.)

October 1, 2012

Global Warming Expands Range of Brown Argus Butterfly

BrownArgusButterfly2012-09-03.jpg "The brown argus butterfly has expanded its range in England." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. D3) A butterfly species in England is expanding its range, thanks to climate change.

In the current issue of Science, researchers at the University of York report that the brown argus butterfly has spread its reach in England northward by about 50 miles over 20 years as a warmer climate allows its caterpillars to feed off wild geranium plants, which are widespread in the countryside.

For the full story, see:

SINDYA N. BHANOO. "OBSERVATORY; A Butterfly Takes Wing on Climate Change." The New York Times (Tues., May 29, 2012): D3.

(Note: the online version of the article has the date May 24, 2012.)

The results summarized above are reported to the scientific community in:

Chen, Ching, Jane K. Hill, Ralf Ohlemüller, David B. Roy, and Chris D. Thomas. "Report; Rapid Range Shifts of Species Associated with High Levels of Climate Warming." Science 333, no. 6045 (August 19, 2011): 1024-1026.


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